Short-Term Benefits Seen For PS2 Rivals

11/06/2000 02:00:00 AM Eastern

By: By Doug Olenick & Greg Tarr

Industry analysts characterized the PlayStation2 shortfall as potentially a short-term windfall for Sega and Nintendo, but all concluded that in the long run the PS2's success would not be undermined by the supply problems now hampering sales.

P.J. McNealy, an analyst with Dataquest, Framingham, Mass., said Sega has an opportunity to cash in on Sony's problem but is not doing enough to drive customers to its Dreamcast console.

"In the short term there will be a consumer backlash," said McNealy. "As they say, kids don't understand rain checks under their Christmas tree. Sega is in a great position. It has lots of stock and games, but it remains to be seen whether it can capitalize on the situation."

Chris Gilbert, Sega of America sales and marketing executive VP, said his company made a fast decision to capitalize on Sony's dilemma by increasing November/December advertising by almost 50 percent.

Gilbert said his company realized a 25 percent increase in its week-over-week sales during the period of the PlayStation2 launch, despite the fact that "virtually all of the co-op white space went to PlayStation2."

"When any new platform or technology comes out in this business it tends to raise the tide for everybody," he said, "but because they raised the interest and didn't have enough supply, we really benefited."

"We believe PS2 and Dreamcast will be judged this Christmas by how good the games are, and how available they are," Gilbert added. "At the end of the day people will buy the machine that plays the best games."

Gerry Kaufhold, principal analyst with Cahners In-Stat, said rollout problems are endemic with high-tech products, and what Sony is going through is hardly a disaster. The net result of the shortages and the tremendous amount of free press it is generating "will be more consumer interest," he said.

However, Kaufhold thought few people shut out from buying a PS2 would jump to the competing Dreamcast and said that customers intent on the Sony platform will wait till the supply picks up.

Meanwhile, one of the hottest video game titles of the past several weeks has been Nintendo's Pokemon Gold and Silver cartridges, which some expect to drive further interest in the popular Game Boy Color handheld game platform and provide additional gift-giving options.

When the channel pipeline will be full is an open question. Sony claimed it will have more to ship early next year, but the analysts were skeptical.

Kaufhold pointed out that Sony is launching the PS2 in Europe later this month and will need to replenish stocks in that market.

McNealy said the gigantic installed base of PS1 owners interested in upgrading to the new console would guarantee supplies remain tight for the foreseeable future.

"I would bet Sony could sell its entire anticipated production run in the U.S. alone," he concluded.